NEW YORK — Only a change in accounting rules prevented Saks Inc. from getting back on track in the first quarter of fiscal 2002. For the three months ended May 4, the Birmingham, Ala.-based operator of Saks Fifth Avenue and numerous department store nameplates recorded a net loss of $25.4 million, or 17 cents a diluted share. That compares to last year’s net income of $26.5 million, or 18 cents.However, excluding a costly change in accounting principle, Saks would have reported net earnings of $21.9 million, or 15 cents, exceeding analysts’ estimates by 2 cents. Saks is among a large group of retailers that have adopted accounting rule FAS 142, which changes how companies amortize their goodwill. Consequently, Saks took a one-time, noncash charge, both pre and after-tax, of $45.6 million, or 31 cents a share. The company also recorded an after-tax cash charge of $1.7 million, or 1 cent, as a result of consolidating or shuttering certain businesses.Net sales for the quarter slipped 2.6 percent to $1.43 billion from $1.46 billion a year ago. Company-wide same-store sales grew 0.5 percent, comprised of a 1 percent increase at Saks Department Store Group (SDSG) offset by a 1 percent decline at the Saks Fifth Avenue Enterprises (SFAE) division.The firm spent the first half of 2001 fending off critical reports about its financial condition and its decision not to pursue a spinoff of Saks Fifth Avenue only to face recession and the repercussions of Sept. 11 in the second half. “We are very pleased with the operating performance during the quarter,” said chief executive officer R. Brad Martin in a statement. “Our comp results for the quarter exceeded those of our traditional and luxury department store peers. The gross margin rate for the quarter was 37.6 percent, a 30 basis point improvement over last year and slightly ahead of our expectations, while selling, general and administrative expenses declined by 15 basis points. The company was successful in reducing year-over-year SG&A expenses by approximately $11 million through various cost reduction and reorganization activities, in spite of increasing health care and retirement expenses and rising property and casualty insurance premiums.”Breaking down results by segment, both Saks units saw solid improvements in operating income. SDSG posted a 4.1 percent rise in earnings to $40.5 million from $38.9 million last year. SFAE profits grew 14.3 percent to $35.2 million from $30.8 a year ago.Those earnings were attained principally through cost cuts as sales at both segments dwindled. SDSG sales nudged down 0.9 percent to $818.2 million from $825.3 million in last year’s first quarter, while SFAE’s sales slouched 4.9 percent to $608 million from $639 million a year ago.Wall Street analysts had sensed something good was afoot earlier in the month when SDSG and SFAE reported April comp-store growth of 1 percent and 0.9 percent, respectively. Indeed, at that time J.P. Morgan Securities analyst Shari Schwartzman Eberts revised her first-quarter earnings per share forecast upward to 14 cents. Saks’ latest results would seem to bear out that optimism.“Clap your hands for them,” said Eric Beder, an equity analyst at Ladenburg, Thalmann & Co. “After Sept. 11, the firm was able to control expenses and leverage that discipline into better results. I was impressed considering that revenue growth was almost nonexistent. They managed to squeeze a lot out of their margins. Hopefully this is a sign of turnaround.”In other bullish news, Saks reported a 14 percent reduction in inventories to $1.36 billion. Moreover, the company substantially reduced its debt. At quarter’s end Saks carried $1.34 billion in debt, representing an 18 percent decrease from last year.The company opened one new store during the quarter, a McRae’s in Jackson, Miss., and also replaced an extant Younkers store in Eau Claire, Wis. In the fall, Saks will open five new stores, including a Saks Fifth Avenue replacement store in Las Vegas, adding to its already substantial 34.3 million consolidated square feet of retailing space.

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